Correlation Between Proact IT and Net Insight
Can any of the company-specific risk be diversified away by investing in both Proact IT and Net Insight at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Proact IT and Net Insight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proact IT Group and Net Insight AB, you can compare the effects of market volatilities on Proact IT and Net Insight and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Proact IT with a short position of Net Insight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proact IT and Net Insight.
Diversification Opportunities for Proact IT and Net Insight
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Proact and Net is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Proact IT Group and Net Insight AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Net Insight AB and Proact IT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Proact IT Group are associated (or correlated) with Net Insight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Net Insight AB has no effect on the direction of Proact IT i.e., Proact IT and Net Insight go up and down completely randomly.
Pair Corralation between Proact IT and Net Insight
Assuming the 90 days trading horizon Proact IT Group is expected to under-perform the Net Insight. But the stock apears to be less risky and, when comparing its historical volatility, Proact IT Group is 1.35 times less risky than Net Insight. The stock trades about -0.12 of its potential returns per unit of risk. The Net Insight AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 677.00 in Net Insight AB on September 3, 2024 and sell it today you would earn a total of 24.00 from holding Net Insight AB or generate 3.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Proact IT Group vs. Net Insight AB
Performance |
Timeline |
Proact IT Group |
Net Insight AB |
Proact IT and Net Insight Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Proact IT and Net Insight
The main advantage of trading using opposite Proact IT and Net Insight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proact IT position performs unexpectedly, Net Insight can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Net Insight will offset losses from the drop in Net Insight's long position.The idea behind Proact IT Group and Net Insight AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Net Insight vs. New Wave Group | Net Insight vs. Cantargia AB | Net Insight vs. Enea AB | Net Insight vs. Proact IT Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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